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EU move protects trade secrets across international borders

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Published: 10 June 2016

LAWS making it easier to enforce the protection of trade secrets will be rolled out across Europe, bringing the EU as a whole more in line with the law in the UK and bringing with it greater protection in some EU countries.

The Trade Secrets Directive was finally adopted by The Council of the European Union at the end of May. It will harmonise the law on trade secrets and the rules on the unlawful acquisition, disclosure and use of trade secrets throughout the EU.

Its purpose is to ensure there are common minimum standards across the EU to protect trade secrets, including the remedies are available where a misuse of trade secrets is identified.

Each of the EU member states has two years to implement the Directive by ensuring that its national law complies with these minimum standards.

Trade secrets can be extremely valuable and can complement, or be used instead of, other forms of intellectual property protection such as patents. It can cover know-how and technical information and other “softer” commercially-valuable information such as customer lists and business plans.

Neil Forbes, partner at Stronachs LLP, said: “Businesses active in overseas markets need to appreciate that protection available for trade secrets in foreign jurisdictions can vary – including differences in the type of trade secrets that can be protected, as well as what they can do if something is stolen or misused.

“One of the most important steps can be a provisional or interim court order to stop the misuse of a trade secret, until a ruling is made by the courts on its merits.

“Without the ability to secure an interim order, the damage that can result from misuse may have been suffered before the case is decided and by that stage it may well be impossible to unscramble the egg.”

The process and costs involved in a holder of trade secrets getting an effective remedy from the courts can also vary greatly from country to country – the directive should help address this gap and ensure EU member states provide effective remedies.

“What the directive does not do is apply further afield and at a time when many businesses in Scotland are seeking out opportunities in markets such as the Middle East, Africa and other territories, it is important that they understand the potential risks,” says Neil Forbes.

“International expansion can involve giving valuable confidential information to partners, employees, agents and potential customers. Protecting these trade secrets in some overseas jurisdictions can be challenging and, in some cases, very expensive.

“Risk can often be significantly mitigated through diligence in relation to overseas partners, taking local advice so that the risks are understood – while also putting in place robust non-disclosure agreements or other similar contracts to protect trade secrets and confidential information.”